Steve Nicol, one of our Chamber board members, along with some other leading oil & gas executives recently met with Secretary of State for Scotland David Mundell to discuss some of the oil & gas industry’s priorities and challenges following the EU referendum result. UNSURPRISINGLY at this stage, there are still too many unknowns to form a fully informed view; however, the UK Government has embarked upon a six-month evaluation period seeking views across a number of industries in order to gain a better perspective prior to them filing Article 50 next year. It is also worth reflecting that there is no real model for the UK to follow throughout the process and it will very much feel like this is a path that is being tread for the first time. When considering the impact on the UK oil & gas industry specifically, there is broad consensus that oil price remains the biggest factor affecting the industry and not the EU referendum result. The notion of the oil & gas industry being less impacted by the referendum decision is further emphasised through the fact that many of the EU’s oil and gas regulations were built around the UK’s own rules. Notwithstanding the above, the industry is watching the developments closely and it is recognised that the result will have some impact. These potential challenges could be broken down into two key areas: Market stability The financial markets have experienced turbulence both pre and post referendum result, particularly with regards to foreign exchange rate movement. There is a significant volume of oil trading that runs through the UK financial markets every day and any fluctuation in these trading conditions could have a serious material impact on both business and the broader economy. The UK oil and gas industry competes on a global scale and is currently desperately trying hard to attract overseas investment into the UK. Any adverse movements created through this uncertainty could be particularly unhelpful. There is also some speculation that this uncertainty could impact borrowing costs which may have a detrimental impact with funding future developments. The final point on market stability centres on taxation. It goes without saying that any increases would not be welcomed by the industry, particularly at this time. Political clarity The UK will have to negotiate 53 trade deals with countries around the world and although many of these countries’ agreements will be less impacted by oil & gas, there will be some specific points to address, including potential tariffs on refined products that are exported to Europe. Perhaps the major concern facing the industry is access to Euro market labour. Any restriction on mobility or increased administration costs would be particularly harmful to an industry that has increasingly relied on the free movement of people so that critical projects can be completed without disruption. Although it is easy to forget in the current lower oil price environment that the industry has suffered in the past from a skills shortages, it is likely that this flexibility will be required in the future again. In summary, although the EU referendum may not turn out to not be the most impacted industry following the EU referendum result, it is expected to at least have some impact. Only time will tell if this presents opportunity or threat in perhaps the industry’s greatest hour of need. Generally, people can cope and deal with change, it is the uncertainty that’s the problem.